India’s Modi Plans Reshuffle

An urgently needed cabinet reshuffle is being planned by Narendra Modi and his Bharatiya Janata Party henchman, Amit Shah, as the Indian prime minister enters the third year of his time in office.

He has not achieved nearly as much as he should have done in the two years since he was sworn in on May 26, 2014, and he needs to install more effective ministers and top bureaucrats in order to implement the many schemes he has announced and pledges he has made.

Reshuffles are often rumored, but the gossip is frequently spread by people trying to affect the outcome, and they often do not happen. This one however does seem to be in the works because Shah, the BJP president, said in a press conference at the party’s Delhi headquarters today that the “cabinet reshuffle will happen soon. The date is not yet fixed”.

Changes are needed because, till now, Modi and his government have failed to deliver his general election promise of introducing what he calls achche din or good times, which means providing jobs, security, and a cleaner more effective government. What has been achieved has too often been overshadowed by extreme anti-Muslim and intolerant Hindu nationalism that Modi has not done enough to curb.

His relations with the media are poor, and he tries not to expose himself to detailed questions. This week he has given an interview to the editor-in-chief of the Wall Street Journal, where he claimed that he has “undertaken the maximum reforms in the last two years,” exceeding anything that had been done before. But interviews (see the transcript here) at the level of editor-in-chief rarely involve close questioning, so Modi had the easy ride that he wanted.

There has been some speculation that Arun Jaitley, the minister of finance and company affairs, as well as information which makes him the main government spokesman, will be moved or at least shed some of his work. Along with Shah, he is the prime minister’s closest ally, but he clearly has too many jobs to be able to focus in depth, even though, as a top lawyer, he is well used to mastering a variety of briefs quickly. Critics say the country could do with a hands-on economics-oriented finance minister able to override top ministry bureaucrats who seem to have led Jaitley into some traps, especially on taxation.

A stronger minister of commerce – Nirmala Sitharaman currently holds the job as a minister of state – would also help trade negotiations and implementation of industrial policy that is focused around Modi’s key Make in India jobs-oriented campaign.

Successful Ministers

Ministers regarded as being specially successful on economic subjects include Piyush Goyal in charge of coal, power and renewable energy, Nitin Gadkari on roads, highways, ports (though his hype often obscures real achievements), and Suresh Prabhu at railways (though his plans have yet to yield many results).

Some observers include Manohar Parrikar, the defense minister, in the successful list, though he has failed so far to cut through the deeply entrenched defense establishment and fully introduce new policies and place major contracts. He sometimes seems distracted by BJP politics in Goa, where he was previously chief minister.

This is a key area for Make in India because the government can directly influence development of the job-creating manufacturing industry by placing urgently needed defense orders, which tie foreign suppliers to Indian partners, but progress has been lamentably slow.

Make in India is amazingly successful as a brand since it was launched in September 2014. Scarcely any foreign government official or business delegation dares to come to India without paying it lip service, while in the media it generates easy instant headlines.

Failing to deliver

But it has failed so far to deliver in terms of foreign direct investment (FDI) in manufacturing industry, and there is little evidence of jobs being created. Extravagant claims have been made by Modi and other leading ministers and officials about the campaign’s impact, some alleging it has generated FDI growth of over 40%. A Business Standard analysis however has argued that the real figure is far lower and, I would add, it cannot be attributed to the campaign because of the lead time on projects.

In a way, the campaign symbolizes both the success and shortcomings of Modi’s first two years. He was also a strong brand when he was sworn as the leader that India needed to revamp the way the country is run and revive the economy.

But neither he nor his pet campaign have delivered what was expected, both failing especially to revive India’s job market, which needs to absorb 1 million new entrants every month – that’s more than the population of Belgium or Greece every year.

The question now is whether he can drive through change, with programs and reforms that could transform the way that India is run, by the time of the next general election in 2019. So far, there have been far too many high profile announcements with few tangible results, typified by the billions of dollar unrealized projects that Modi has announced during high profile foreign trips to some 30 countries (the total last November was over £80bn).

The focus does not now need to be on conventional economic reforms like a long-delayed goods and services tax, nor land acquisition and labor laws that the government has failed to introduce and now says should be introduced by individual states. The time for the services tax was in Modi’s first year in office, when he failed to move fast enough. He then ran into trouble in the Rajya Sabha upper house of parliament, where the BJP does not have a majority, and failed to manage the politics deftly enough to win support from other parties.

He has managed to have bills passed in areas like coal mining, insurance, real estate, and bankruptcy, and has adopted the previous government’s highly successful Aadhaar electronic identity scheme that opens up a wide range of facilities, especially for the poor. He has also managed to reduce corruption, though mostly only at the top levels of the central government.

More important now are programs that could actually change the way that India works. In addition to Make in India, they include financial inclusion, Digital India for what is described as a “digitally empowered society and knowledge economy,” Swachh Bharat that includes Clean India and provision of toilets, and Skill India and Start-up India that are aimed at providing jobs and encouraging young entrepreneurs. Others include a mis-named plan for Smart Cities that mostly involves providing basic services and amenities that are regarded as automatic in developed countries.

These schemes need far more drive than they have been getting to ensure that individual states take up the challenge and that, for example, there is water and chemicals for toilets, electricity and internet for computer installations, and that financial inclusion involves active banking by the poor.

India is a slow-moving and complex society and is resistant to change. Modi said when he was elected that he needed 10 years to transform India, but the electorate will expect evidence of change in three years’ time – and that is why a ministerial reshuffle is needed.

John Elliott is Asia Sentinel’s New Delhi correspondent. He blogs at www.ridingtheelephant.com.